Correlation Between On4 Communications and Star Alliance

Can any of the company-specific risk be diversified away by investing in both On4 Communications and Star Alliance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining On4 Communications and Star Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between On4 Communications and Star Alliance International, you can compare the effects of market volatilities on On4 Communications and Star Alliance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in On4 Communications with a short position of Star Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of On4 Communications and Star Alliance.

Diversification Opportunities for On4 Communications and Star Alliance

-0.05

Correlation Coefficient

On4 Communications  Star Alliance

Good diversification

The 3 months correlation between On4 and Star is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding On4 Communications and Star Alliance International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Alliance Intern and On4 Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on On4 Communications are associated (or correlated) with Star Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Alliance Intern has no effect on the direction of On4 Communications i.e., On4 Communications and Star Alliance go up and down completely randomly.

Pair Corralation between On4 Communications and Star Alliance

Given the investment horizon of 90 days On4 Communications is expected to generate 10.67 times more return on investment than Star Alliance. However, On4 Communications is 10.67 times more volatile than Star Alliance International. It trades about 0.23 of its potential returns per unit of risk. Star Alliance International is currently generating about 0.04 per unit of risk. If you would invest  0.01  in On4 Communications on May 5, 2025 and sell it today you would earn a total of  0.00  from holding On4 Communications or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

On4 Communications  vs.  Star Alliance International

On4 Communications

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in On4 Communications are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, On4 Communications demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Star Alliance Intern

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Star Alliance International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Star Alliance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with On4 Communications and Star Alliance

The main advantage of trading using opposite On4 Communications and Star Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if On4 Communications position performs unexpectedly, Star Alliance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Star Alliance will offset losses from the drop in Star Alliance's long position.

The idea behind On4 Communications and Star Alliance International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.